Intellectual property law is good. Excess in intellectual property law is not. This blog is about excess in Canadian and international copyright law, trademarks law and patent law. I practice IP law with Macera & Jarzyna, LLP in Ottawa, Canada. I've also been in government and academe. My views are purely personal and don't necessarily reflect those of my firm or any of its clients. Nothing on this blog should be taken as legal advice.

Wednesday, October 30, 2013

AC & the Post Secondary Tariff: “And Then There Were None”? - or - “It Ain’t Over Till It’s Over”?

Both of the
leading institutional organizations representing the administrations of
Canadian universities and colleges respectively have now withdrawn from the
Copyright Board Post-Secondary Tariff proceedings launched by Access Copyright
(“AC”) in 2010.

A number of factors influenced
this decision, including revised copyright legislation in 2012 that provides
new rights for educational uses of copyright-protected works without permission
or paying royalties and a decision by the Supreme Court of Canada interpreting
fair dealing in an education context. Institutions have enhanced
risk-management copying controls and practices and are increasingly relying on
licences and database subscriptions to meet copying needs.

The Association’s Board
approved withdrawal from the Copyright Board’s proceedings after extensive
consultations with members. A majority of ACCC members are not using, and
do not intend to use, a Copyright Board tariff to meet their copying
requirements. ACCC members currently using the Interim Tariff or the Model
Licence intend to review these arrangements at the earliest opportunity. The
Board therefore concluded that it made greater sense to focus resources on
supporting its members than on financing a Copyright Board hearing in 2014.

Of course,
this is all well and good as long as the Board does not proceed to approve a
“mandatory” tariff, i.e. a tariff that kicks in for the full amount per FTE and
even retroactively as soon as there is infringement by the making of just one
copy of just one work in Access Copyright’s repertoire – and despite all the
efforts of an institution to ensure that it complies with the Copyright
Act, and the money that it has spent on securing permissions from other
sources, when those are necessary. That result may seem absurd – and it is. How
could Canadian law impose a “penalty” of millions of dollars (in the case of a
large university) for making one infringing copy of, for example, one article
from one newspaper? However, this is precisely AC’s operating theory and, so
far, the Copyright Board has gone to some length to explicitly endorse it.

This is
also the theory and the entire basis of AC’s lawsuit against York University. Interestingly,
however, York has challenged this theory only with respect to the “interim
tariff” and, apparently, essentially only because it is “interim”. So, even if
York prevails on this narrow ground – which would be several years down the
line the way things seem to be going – the result could still leave open the
question of whether a final approved tariff can be mandatory. Moreover, there
is a significant risk, at least on the basis of the current pleadings, that the
York litigation could result in a confirmation by the Federal Court that a
Copyright Board tariff could effectively be mandatory in the “one copy of one
work” sense. That would be a disaster for Canadian educators, whose gains over
the last decade of litigation and legislation would be effectively erased.

Any
sensible interpretation of the Copyright Act would allow institutions
to make an informed choice about whether or when they should obtain a license
from AC on the hypothetically possible basis that what AC offers is a
cost-effective way to comply with the law, compared to other alternatives. That
said, if there is a bona fide
copyright policy in place and even if there are minor slip ups now and then, the
Supreme Court of Canada has clearly indicated that the institution is not
automatically responsible for those incidents, and Parliament has further clearly
intended that such minor infringement by non-commercial entities would be
subject AT MOST to a $5,000 global limit on statutory minimum damages for ALL previous
infringing activity. If the idea that making one copy of one work that turns
out to be infringing can result in a confiscatory grab in the nature of a “forfeiture”
of millions of dollars sounds contrary to the entire scheme of the Copyright
Act and completely alien to our judicial system, it’s because it is.

I’m unaware
of any educational institutions that are scofflaws that authorize systematic infringement.
In fact, most of them usually err on the side of caution and often excessively
so in their policies, practices and attitude. However, AC apparently believes
that all the institutions that opted out of their model license and the
“interim tariff” are such scofflaws, copying works for which they had not
obtained permission and beyond what AC’s stubbornly narrow and “in denial” view
of what the “users’ right” of fair dealing actually permits. The doors of
Canadian courts are open for AC members to sue those institutions for infringement
and prove their case. Instead, AC believes it has a much easier way, namely to ask
the Board to approve a tariff, without any serious objection as it turns out,
and on the basis of much more relaxed standards, especially with respect to
evidence, than those required in the courts, and then hope that it will be able
to enforce the resulting tariff on educational institutions through the Courts.
That is also what the York University test case is all about.

Access
Copyright is, frankly, aggressive and over-reaching and now fighting an openly
declared war for the survival of its basic business model and much, if not most,
of its revenue stream after two unequivocal and decisive defeats in the Supreme
Court of Canada in the span of only eight years, not to mention the rejection
by Parliament of virtually all of its important lobbying efforts in the recent Copyright
Modernization Act. One would think that, in light of these defeats, AC
would finally “get it” and move on to serve its remaining clients in more
innovative and constructive ways, instead of hopelessly trying to undo the
Supreme Court’s rulings and suing one of its biggest and best past, and
potentially future, “customers” (York) in a test case that could adversely
affect the entire Canadian educational establishment. One would think that that
would be a futile strategy, but so far, AC seems to be doing rather well. The
two main objectors at the Copyright Board have given up and York University has
filed arguably underwhelming pleadings that do not appear to adequately confront
what is probably the overwhelming main issue for Canadian universities: i.e. whether
the inevitable final approved tariff can be “mandatory”.

If either
the AUCC or ACCC intend to challenge the mandatory tariff theory, it’s not
apparent that this is the case. Neither of them even tried to challenge the
interim tariff at the Board, which would have had a very good chance of success,
had it been done in a timely manner. If it had succeeded, we would not be
seeing the York University litigation in its present form. In all likelihood,
we wouldn’t have seen any litigation at all because the new legislation
restricts recovery of statutory minimum damages to $5,000 from non-commercial entities
for ALL infringement prior to the launching of any litigation. As it happens,
York University is being represented in the current AC litigation by the same
law firm that has represented AUCC at the Copyright Board in the current
hearing.

It will be
very interesting to see how the Board will handle this. CIPPIC remains on the
record, pro bono, for CAUT and CFS,
along with Prof. Ariel Katz who is representing himself as a concerned professor
affected by these matters. However, neither
CIPPIC nor Prof. Katz (although they are both very capable) can begin to do the
job that AUCC and ACCC might have done, with their seven figure budgets and
enormous cache of interrogatory evidence. As matters now stand, even though the
cost of collecting all these documents and data has been incurred by the
educational institutions, if this evidence ever sees the light of day, it will
only be as presented by AC though AC’s lens in its Copyright Board case. There
are a couple of other parties still on the record, but they seem to have been
essentially invisible and are not represented by counsel.

This leaves
the Copyright Board with a major problem. This is possibly the most important
and potentially controversial “public interest” case it has ever dealt with. It
will affect the entire Canadian educational system for a long time to come, at
a time when taxpayers and governments at all levels are concerned with
innovation, competitiveness and efficiency. However, this hearing seems poised
to be on the brink of systemic failure when it comes to the public interest, if
it continues with the AC leviathan being effectively unopposed.

The Board
must inevitably follow what Parliament and the Supreme Court of Canada have
laid down as the law. AC will argue that
the AUCC and ACCC policies contravene that law. AC will adduce a lot of
evidence, which it has presumably spent millions developing. But the university
and college administrations have withdrawn and have achieved nothing by way of
any apparent concession in so doing, other than model licenses negotiated
before the new legislation was passed and the Supreme Court ruled. Moreover, in light
of the new legislation and the Supreme Court’s rulings, these model licenses
are apparently seriously over-priced and contain clearly inappropriate terms and
conditions.

For
example, in the case of universities, the $26 figure is about 50% more than the
average FTE amount that was being paid pre-pentalogy 2012 and pre Bill C-11.
Indeed, the previous figure was far too high even by pre-pentalogy and Bill
C-11 standards, because it had been agreed on even before the CCH decision in
2004 and not reduced afterwards when the opportunity arose in 2007.

At the forthcoming
Board hearing, AC will argue that these rates, terms and conditions are the applicable
proxy because they were agreed to by sophisticated organizations with
experienced counsel. AC will also attack the AUCC and ACCC fair dealing
policies, which are very similar to each other, and argue why a mandatory
tariff is essential in the face of these policies. Although these policies are
not as nuanced and sophisticated as those of U of T or UBC, they are defensible.
However, their sponsors will not be there to defend them either with the law or
with evidence – or to challenge the evidence that AC will most certainly and
most vigorously lead.

Ironically,
much of AC’s evidence will derive from interrogatory responses furnished by the
universities and colleges themselves before they withdrew, after having spent
millions on legal and related costs.

The Board
has a crucial role to play in looking out for the public interest and for economic
efficiency in the course of the oversight of collectives. It no secret that the Board is under scrutiny
now from many sources in terms of its protracted and expensive proceedings, its
unusually long delays in rendering decisions, its inevitably retroactive
tariffs, and other issues that are causing considerable concern,
as outlined by Michael Geist a few months agoand
asthe Wire Report has just now reported. The Supreme Court of Canada has now
clearly focussed on the issue of economic efficiency in respect of the Board’s
decisions and has also clearly indicated that, if the Board misapplies the law
as spelled out by the Court, even if it is engaged in fact finding, the result
will be viewed as “unreasonable” and thus, reversed.

How is the
Board to deal with AC’s evidence (much of it, ironically enough, supplied by
AUCC and ACCC) and arguments if there is little or no evidence or argument on
the other side? Can it avoid accepting the main elements of AC’s case if the
main objectors, who have the resources to challenge AC, have chosen not to
withdraw their objections and not be there? Will this be, in effect, a
“default” decision? Will it let the public interest now depend on the capable
but under-resourced efforts of a law school clinic and law professor, both
acting pro bono?

The credibility
of the Copyright Board depends primarily on the effective operation of the adversarial
process, in which all the important interests are presented by parties with
competent counsel who have adequate resources to do a good job and no inappropriate
conflicts of interest. When the Copyright Board system has worked well in the
past, it was virtually invariably when certain objectors with large resources,
ranging from broadcasters to ISPs to tech companies to retailers, have stepped
up to the plate, if only because their
own business or institutional interests happened to align with the public
interest. That process is not happening in this instance, for whatever reasons.
In this case, the two main objectors not only have spent millions on legal fees
and related expenses, and not only have spent endless hours in answering AC’s
interrogatories, and not only have furnished massive amounts of interrogatory
evidence that will now be used to the benefit of AC. They have also withdrawn
their objections, apparently without getting anything in return. One might have
thought that the obvious quid pro quo
for withdrawal of objections would be the withdrawal of the tariff application,
or, at the very least, withdrawal of any claim that the tariff could be
“mandatory”. But that didn’t happen. We don’t know if there was even any
attempt made to secure such a result. Even informed observers can be forgiven
for being baffled.

Unless they
have a surprise “Plan B” in store, Canadian universities and colleges
apparently are unwilling to do anything other than wait and watch what will
happen at the Copyright Board. The really interesting question is what the
Board is going to do with the “hot potato” that has been left in its hands. If
the “system” that is in place now fails to deliver a fair, efficient and
correct result based upon a sound jurisdictional foundation and the result ends
up harming the cause of education and innovation in Canada, the fallout may
affect not only the educational system. Such an outcome may raise fundamental
questions about the overall current system of collective administration of
copyright in Canada, including the mechanism of oversight by the Copyright
Board.

So – is it
all over except for the sound of the dull thud of a rubber stamp? Not necessarily. There are still some options
open to the Copyright Board and interested parties. Since it’s World Series
time, let’s recall what that great copyright scholar, Yogi Berra, once brilliantly
said: “It ain’t over till it’s over.” Therefore, in the spirit of sports, my bet would be to stay tuned.

2 comments:

I think the first "not" in "Can it avoid accepting the main elements of AC’s case if the main objectors, who have the resources to challenge AC, have chosen not to withdraw their objections and not be there?" might be an unintended vestige of editing. Good post though!